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Investing on Autopilot
In our previous guide on Index Investing, we talked about how buying a single “All-in-One” ETF (like XEQT) is the smartest way to build wealth.
But for many people, the thought of opening a brokerage app, navigating a trading screen, reading bid/ask spreads, and manually clicking “Buy” during market hours is terrifying. They want investing to be as easy as a Netflix subscription.
Enter the Robo-Advisor.
What is a Robo-Advisor?
A Robo-Advisor is a digital platform that provides automated, algorithm-driven financial planning services with little to no human supervision.
How it works:
- You sign up and answer a 5-minute questionnaire about your age, income, and risk tolerance (e.g., “Would you panic if the market dropped 20%?”).
- The algorithm assigns you a perfectly diversified portfolio of low-cost ETFs (usually a mix of stocks and bonds).
- You set up a weekly automatic transfer of $100 from your bank account.
- The Robo-Advisor does the rest. It automatically buys the ETFs for you, reinvests your dividends, and rebalances your portfolio when the market shifts. You literally do nothing.
The Catch: The Management Fee
Why doesn’t everyone use a Robo-Advisor? Because convenience costs money.
When you buy an ETF yourself on Questrade or Wealthsimple Trade, you only pay the underlying ETF fee (around 0.20%). When you use a Robo-Advisor, they charge you an additional management fee (usually around 0.40% to 0.50%) for doing the work for you.
Your total fee will be roughly 0.60%.
Is 0.60% bad? No! Remember, a traditional mutual fund at a Big Bank charges you 2.00%. A Robo-Advisor is still massively cheaper than a bank, making it a fantastic middle-ground for hands-off investors.
The Best Robo-Advisors in Canada (2024)
Here is a breakdown of the top players in the Canadian market.
1. Wealthsimple Invest (Best Overall)
Wealthsimple is the undisputed king of Canadian Robo-Advisors. Their app is beautiful, intuitive, and designed specifically for millennials and Gen Z.
- Management Fee: 0.50% (Drops to 0.40% if you invest over $100,000).
- Minimum Balance: $0. You can literally start investing with $1.
- Standout Feature: They offer specific “Halal” portfolios and “Socially Responsible Investing (SRI)” portfolios for those who want to invest ethically.
2. Questwealth Portfolios (Lowest Fees)
Questrade’s Robo-Advisor option is slightly clunkier than Wealthsimple, but they compete aggressively on price.
- Management Fee: 0.25% (Drops to 0.20% if you invest over $100,000).
- Minimum Balance: $1,000 required to start.
- Standout Feature: Active management. Unlike Wealthsimple which is purely passive, Questwealth’s algorithms actively try to tweak the portfolio to capture market trends.
3. RBC InvestEase (Best for Big Bank Loyalty)
If you already bank with RBC and refuse to open an account with a startup, this is your best option.
- Management Fee: 0.50%.
- Minimum Balance: $100.
- Standout Feature: It integrates seamlessly with your existing RBC online banking dashboard, and it uses incredibly solid RBC iShares ETFs.
Conclusion
If you have the time and confidence to click “Buy” on an ETF once a month, you should absolutely do it yourself and save the 0.50% fee.
But if you are paralyzed by the stock market, open a Wealthsimple Invest account today. Paying a tiny robot 0.50% to perfectly manage your retirement so you can sleep peacefully at night is worth every penny.